Spanish Lottery Sale Called Off
September 29th, 2011
Pressure from other political parties and major banks has led to the abandonment of the part privatisation of the national lottery.
The government has been under pressure not to float the company and Esteban González Pons, the main opposition spokesman, said that his party will not privatise the lottery company.
The decision means that the €7bn windfall that Spain would have benefiied from the sell-off of Loterías – the country’s biggest privatisation – will now not appear. On the other hand, the €3bn a year that the company brings in with the famous Christmas lottery known as El Gordo, or The Fat One, and other draws or pools competitions will continue to go entirely to the Spanish exchequer.
The float of 30% of the company was due to be led by UBS, Credit Suisse, JP Morgan Cazenove and Goldman Sachs after fierce jostling by banks in the City of London.
According to the Guardian, Elena Salgado, the finance minister, said that, for the moment, Spain would be better off holding on to what is a generous cash earner. “The lead managers said they were not sure that we could get the price that they and the government believe it is worth,” she said.
Major Spanish banks such as Santander and BBVA were also rumoured to have opposed the float, saying it would draw deposits away from them.
Loterías reported a profit of just under €3bn in 2009 on sales of €9.8bn and controls 77% of Spain’s lottery market.
€2.15bn was bet last year on El Gordo – the world’s biggest lottery draw – with almost a third retained by the lottery administrator. El Gordo has been played every year since 1812.
The decision came less than a week after the government gave final authorisation for the partial listing. Salgado said Loterías would be put on the market when conditions improved but she is unlikely to get the chance with the general election less than 2 months away.
